New Delhi: Production at the Manesar factory of Maruti Suzuki India Ltd was hit after the company said it would only allow workers who had signed a so-called “good conduct bond” to work, citing indiscipline and sabotage by workers over the past two months, following a strike in June.
The move could hit the production of the firm’s new car, an upgrade of the popular Swift, which has received some 85,000 bookings in just around 10 days after its launch, although some Maruti executives said the firm was exploring the possibility of moving production to the Gurgaon plant.
The spat could also spiral into a wider labour crisis in the Gurgaon, Sohna, Manesar belt in Haryana that houses the factories of several auto companies, with Satbir Singh, president of the Haryana chapter of the Centre of Indian Trade Unions (CITU), a federation of labour groups, saying the unions of other firms in the area would join Maruti workers in protesting against the company’s action. The workers met on Monday evening with officials from CITU, the All India Trade Union Congress, another federation of unions, and representatives from the unions of Maruti Suzuki’s Gurgaon plant and a few other companies in the area.
In recent years, the area has seen heightened union activity. In 2009, for instance, workers in 60 factories in the region went on strike protesting against the death of a worker at Rico Auto Industries Ltd. Maruti Suzuki escaped relatively unscathed in that strike, which hit companies such as Honda Motorcycle and Scooter India Pvt. Ltd, Hero Honda Motors (now Hero MotoCorp Ltd), Sona Koyo Steering Systems Ltd and Lumax Industries Ltd.
CITU’s Singh said multinational and domestic auto companies in the area want a union that toes their line.
“This is very bad. Already the industry is reeling under pressure from various factors. If it (the protest) becomes a prolonged thing, then it will have an impact on the production, and on industry sales figures,” said a top official with the Society of Indian Automobile Manufacturers (Siam), an industry lobby group, who did not want to be named.
Monday’s disruption came after the firm suspended 10 workers, and dismissed 11, including six trainees, on Sunday. It also decided to get workers to sign a pledge promising not to sabotage production, resort to go-slow tactics or otherwise hamper output at the Manesar plant. The workers refused to do this, and production came to a halt. “There is no production today,” a Maruti spokesperson said on Monday.
The latest developments at the Manesar factory are a continuation of the labour unrest that started in June, when workers struck work for 13 days demanding the recognition of a new labour union, the Maruti Suzuki Employees Union.
The company said in a notice on Monday that even after calling off the strike (in June), which was illegal, the workers did not restore normalcy and that indiscipline became the order of the day. In the months following the strike, production fell to an average of 1,085 cars a day compared with 1,180 before.
“The company in the process suffered a recurring production loss of 756 vehicles during the period 18 June 2011 to 25 June 2011 (average 95 vehicles per day) leading to a financial loss of approximately Rs 3 crore per day, which is continuing as the workmen have not resumed normal production despite repeated advice of the management,” Maruti said.
“There is no sabotage. The company is making up all these things,” said Shiv Kumar, secretary of the Maruti Suzuki Employees Union.
Kumar said workers just wanted the union to be recognized as their interests are not being taken into consideration by the Gurgaon-based labour union, which, he alleged, is backed by the company.
The issues the Manesar union wants addressed, according to Kumar, include a growing number of so-called contract workers, improper working conditions and issues related to wages and leaves. Maruti’s Manesar factory has a total of 2,500 workers, of which 40% are contract or temporary workers.
Contract workers are not on the rolls of the company, but work for a contractor hired or retained by it. The head of HR and industrial relations at an auto ancillary company in Gurgaon, speaking on condition of anonymity, said firms are increasingly hiring temporary workers in an attempt to pare wage costs. These workers are now becoming aware of their rights and want at least the same working conditions and social security benefits as regular workers, added this person.
The protest at Maruti is another indication of the need for labour reform, said Santanu Sarkar, professor of personnel management and industrial relations at XLRI, Jamshedpur. According to him, the Trade Unions Act of 1926 is archaic—it gives workers the freedom to form a union, but doesn’t make it mandatory for the management to recognize it.
The Siam representative also said the real issue was labour reform. “Labour laws need a change and that is a concern for the entire industry,” he said.
Maruti Suzuki has four assembly lines, one in Manesar and three in Gurgaon, with an annual capacity of over 1.2 million vehicles. It is setting up two new assembly lines at the Manesar plant to add capacity of 500,000 units by 2013. The Manesar plant produces about 1,200 vehicles every day in two shifts. The plant produces models such as the SX4, Swift and A-star.
Two people familiar with the matter, who did not want to be named, said the company was considering shifting production of the car to its Gurgaon factory. One of them, a top company official, said that the company knew this won’t be easy as it involved moving the production “of a lot of critical parts to Gurgaon”. Maruti Suzuki’s managing executive officer for engineering, I.V. Rao, agreed that shifting production to Gurgaon was an option, but insisted that the firm was yet to take a call on doing this.
The Maruti Suzuki stock fell 0.2% to Rs 1,080 apiece on BSE on a day the Sensex rose 3.58% to close at 16,416.33 points.